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Business Finance

Unsecured Loans Bad Credit

Unsecured loans are often sought where an asset or goods are not available to offer as security against the loan and usually for purposes where a tangible asset is not being acquired. For example, to cover a cash flow shortfall or as capital.

Business Finance Unsecured Loans Bad Credit
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Compare Interest Rates on Unsecured and Other Loans

This calculator provides a useful guide in comparing interest rates on both unsecured commercial loans and other forms of lending. While you may be focussing on an unsecured loan, there may be alternatives worth considering. Use our comparison chart and speak with us about your options.

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Disclaimer: This comparison interest rate chart is purely for the purposes of reference and comparing. Using the calculator does not entail an application. The repayments calculated do not represent a quote, any indication has been approved or offered. The charges and fees that apply to loans may not all have been included. Any offer which may be made to you for loan may vary from those values displayed.

16 May

Today's best rate

Finance Equipment From

4.99 % Fixed

* The interest rate is calculated on a secured loan for commercial use, effective 16/05/2024 and subject to change. Warning: the interest rate is only true for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

16 May

Today's best rate

Finance Equipment From

4.99 % Fixed

* The interest rate is calculated on a secured loan for commercial use, effective 16/05/2024 and subject to change. Warning: the interest rate is only true for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

What is
Unsecured Loans – Bad Credit

As there is no security offered against the loan, it is considered a higher risk loan and will attract a higher interest rate than a secured loan. In addition, not all banks and lenders are prepared to offer unsecured loans. On that basis, it is quite a specialist area of lending and each application would require individual assessment and evaluation.

If the business has bad credit issues, that further complicates the unsecured loan scenario. Bad credit loans are also considered a high risk loan category and many lenders are not actively involved in extending bad credit business loans.

If you have bad credit issues, engaging the services of a broker to source you an unsecured loan may be of significant benefit. A professional broker will know exactly which lenders will be more open to considering your application and the broker can assist you in preparing your application to specifically meet the requirements of those lenders.

In addition, the broker should have honed negotiating skills to bargain with the lender to achieve the best outcome for you.

Unsecured Financing for Suboptimal Credit Score

Features
Business Loan Features

While individual business lenders will have their own guidelines and requirements for unsecured bad credit loans, we can provide a general overview of what may be possible.

  • Rated as a high risk loan.
  • Will have a higher interest rate compared with secured loans and for applicants with good credit.
  • A personal guarantee or some other form of assurance may be required by the lender.
  • Unsecured loans may have a short loan term, eg 3-6 months. Long loan terms are not usually offered for this type of loan.
  • The interest rate may be set at a fixed rate or a variable rate, depending on the lender.
  • The repayment is usually at a fixed amount.
Improving Commercial Loan Application

Tips
Tips for Improving Your Unsecured Business Loan Application

It can be challenging for to achieve a workable outcome for high risk loans such as this, but there are steps that can be undertaken to improve the possibilities.

  • Review and fix your Credit Report: Before applying for a loan, get a copy of your Credit Report and go through all the negative entries. Following the standard processes, see if any of these entries can be removed from your credit history. Historical entries may be able to be removed. This can be done for some entries after a certain amount of time following a set process. You can review these processes at credit reporting company websites.
  • Provide as much detailed documentation as possible. The more positive things the lender knows about your business the better they may view your application. For example, if your bad credit issues relate to historical issues or isolated events and you have good current trading figures this may assist your application.
  • Engage the services of a financial advisor to assist you prepare a business plan moving forward to support your unsecured business loan application.

Connect with us
Sourcing an Unsecured Business Loan with Bad Credit

If you are in this situation and even if you have been rejected by a bank or lender, a workable solution may still be possible. Our commercial loan company has connections with many lenders and brokers that may be open to assisting you.

Send us details of your requirements and we will respond with contacts for you to follow-up.

Connect with us for possible solutions for a bad credit unsecured loan.

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FAQs
Unsecured Loans Bad Credit

Bad credit is a description of the enterprise which is applying for funding. It is not a credit product. When an enterprise with poor credit is approved by a lender, they may have access to the full range of commercial funding products. The selection includes asset acquisition products – Chattel Mortgage, Leasing, Rent to Own and Hire Purchase, as well as secured and unsecured products, overdrafts and others. Lenders may in some circumstances stipulate which products they will approve for enterprises with poor credit.

When lenders assess funding applications for enterprises with credit issues, they may include a review of the owner’s situation also. This may especially be expected with smaller enterprises. Where an owner has a good rating and can provide acceptable guarantee or collateral, this may contribute to a better interest rate or less stringent conditions being applied to any offer made.

When preparing quotes and offers including the interest rate, lenders will assess each application individually. This includes for enterprises with both a good and a bad rating for credit. There are not typically specific rates advertised by lenders for applicants with credit issues. Each is considered individually. The rates advertised by lenders will be for applicants with good ratings. Those with a bad rating would need to request a quote or submit an application to obtain information on the interest rate applicable to their vehicle funding.

Major banks may reject applications based on credit issues due to their strict operational structure, guidelines and criteria for approvals. There are non-bank credit providers that do consider applications with credit problems. Those requiring this type of funding may seek the services of a broker to assist in sourcing the appropriate credit providers and handling the negotiations.

There are ways in which credit problems can be resolved and ratings improved. Sources such as Moneysmart provide information for individuals on fixing credit problems. Over time, a better record of making payments on time may be developed which may improve the rating. Reducing debt levels may reduce the risk level as assessed by lenders and attract a better offer.

No. Low Docs and No Docs refer to applicants that do not have all the documentation that is required in completing the credit application form. These applicants may have a good credit rating or score. The rating considered may be for the enterprise or the personal rating of the owner. An applicant with credit issues may have all the documentation.

The reference to security is the guarantee or collateral attached to the funding. It is security from the perspective of the credit provider not the borrower. A secured product will typically be secured primarily by the asset being funded. Additional security may be required with some applications. An unsecured product is not secured with a physical asset or with the goods, services or other purpose of the funding. Security may be requested for unsecured products via personal guarantee or other property.

To achieve a better interest rate offer, applicants with credit issues may consider a number of options and actions. They may take steps to improve their rating by fixing any errors which appear in their credit report. They may take steps to reduce debt levels by paying off existing commitments including credit cards. This may improve the assets-liabilities balance sheet. Additional guarantees or collateral may be offered. The lending market may be explored to consider options available through a range of credit providers. Applicants may seek the assistance of broker services to source better interest rates for credit products.

Unsecured credit products are typically used for expenditures, purposes and purchases which do not involve the acquisition of physical assets. Or where an asset such as equipment or motor vehicle, is not considered suitable security for a secured credit product. A Business Overdraft may be used for similar purposes as an unsecured credit product. This may offer an alternative option for consideration.

An unsecured credit product is not secured by the purchases for which the credit was obtained. This is due to the purchase not being a physical asset or is considered unsuitable. But collateral may be requested by lenders for this type of product. Collateral may be provided in the form of a personal guarantee by the owner or by property or assets owned by the enterprise or the owners. The specifics of the collateral would be discussed based on the individual application.

The expenditure or purpose for an unsecured credit product may include those associated with business development. They may include undertaking staff training and development, installing systems that are not suited to asset funding, implementing sales and marketing campaigns and research and development costs associated to develop products, amongst others. The approval of the credit is subject to individual lender decisions.

The circumstances or reasons how an enterprise came to have credit problems may be taken into account when the credit application is assessed by a lender. Being open and honest about how the situation came about and what actions have been taken to rectify the situation may assist with the application. Lenders may specifically request further information and explanations.

Where an enterprise is facing credit problems due to being laden with debt, seeking funding to consolidate debt may be considered. Application may be submitted for a single unsecured funding arrangement to pay out the existing debts into one. This may ease cash flow pressures and assist the enterprise to improve its rating. Lenders that provide this type of funding service may be sourced with the assistance of a broker.

Refinancing is available across all commercial funding products and is sought to address a number of requirements. Where funding was secured based on poor credit issues the interest rate would likely have been higher than for an application with a good rating. If the credit problems have been resolved or improved, the enterprise may consider applying for refinancing to achieve a better interest rate. Refinancing involves a new funding arrangement and fees would be incurred for finalising the existing arrangement early. The decision as to whether the solution offers a cost-effective option would need to be considered by the operator.